0989 Educational Facilities Authority
0940 - BOND FINANCING
CEFA issues revenue bonds to assist private educational institutions of higher learning construct educational facilities. Because it is authorized to issue tax-exempt bonds, the Authority may be able to provide more favorable financing terms than might otherwise be obtainable. CEFA also may include qualifying nonprofit entities as eligible program participants for the construction of student and faculty housing. Bonds issued by CEFA are not a debt, liability, or claim on the faith and credit or the taxing power of the State of California, or any of its political subdivisions. The full faith and credit of the participating institution is normally pledged to the payment of the bonds. Bonds issued for this purpose are not subject to the state's "private activity" bond ceiling as specified in the Federal Tax Reform Act of 1986.
For purposes of the California Educational Facilities Act, "private college" or "private participating college" means a private college that does not restrict the admission of a student based on his or her race or ethnicity, provided that the financing does not violate constitutional provisions.
"Bond" means bonds, notes, debentures, securities, or other evidences of indebtedness. This broad definition allows CEFA to issue tax-exempt direct or private placement loans for colleges and universities, which may provide greater cost savings than these colleges and universities might otherwise realize on a traditional bond financing.